THE MIGRATION ECONOMY

The foreign worker is many things to many people. For conservative politicians and trade-union organizers in industrial countries, he is the illegal migrant--a lawbreaker who deserves a one-way ticket back to whatever country he came from. For immigration advocates and business groups, he is a vital pillar of today's globalized economic order, whether a legal resident of his new country or not. For the political leaders of developing countries, he is a modern-day "hero" who sends home a hefty portion of his paycheck to help support his family members and keep his old community afloat.

One point is incontrovertible: for better or worse, the ranks of foreigners holding jobs in North America, Western Europe and the Gulf is rising significantly. Some 1.3 million immigrants settle in the United States annually, an estimated one third of them illegally. More important, the money these migrants are remitting to their home countries is skyrocketing. Last year total remittances reached an estimated $100 billion, a jump of about 15 percent over 2002. The 20 million people who constitute the Indian diaspora, a group with as much ethnic and cultural diversity as the population it left behind, are spread over 135 countries. Last year they sent back to India almost $15 billion--a source of foreign exchange that exceeds revenues generated by the country's highly regarded software industry.

In the past, foreign workers and their remittances got scant policy attention. That's not the case anymore. Immigration has become a major domestic and foreign-policy issue from Paris to Manila to Mexico City. Many developing countries, who have come to depend on remittances as a vital source of external finance, are pushing a pro-migration agenda. For good reason: Polish seasonal workers, for example, who harvest grapes in France, apples in Switzerland and asparagus in Germany help ease pressure on their country's 18 percent unemployment rate. Advanced nations are trying to balance their need for young workers with avoiding a massive influx of outsiders that might overwhelm their social systems. Last week French Interior Minister Nicolas Sarkozy paid a visit to Beijing to meet with Chinese President Hu Jintao. Their conversation centered on the surge of illegal Chinese immigrants into France in recent years.

Mexican President Vicente Fox has made immigration a cornerstone of his foreign policy. His government has been strenuously lobbying the United States to loosen its immigration policy, which has been greatly tightened for security reasons, and to grant amnesty to the roughly 4 million undocumented Mexican workers in America. President George W. Bush has acknowledged that the U.S. immigration system is "broken," and last week he tried to fix it by unveiling the broad outlines of a new immigration initiative that drew praise and scorn from across the U.S. political spectrum. Though its details have not yet been worked out, Bush proposed a guest-worker program that would legalize the status of millions of illegal foreign workers but perhaps stop short of granting them permanent-resident status. "Out of common sense and fairness, our laws should allow willing workers to enter our country and fill jobs that Americans are not filling," declared Bush. Business leaders hailed the announcement. Democratic presidential hopefuls and some of Bush's staunchest supporters in the Republican Party dismissed the proposal as a politically inspired ploy aimed at courting Hispanic voters ahead of this year's election.

The timing of the announcement was important: migration will be the hot topic at a Western Hemisphere summit this week in Monterrey, attended by Bush and hosted by President Fox. The Mexican leader welcomed the immigration plan but warned it did not meet all of his government's goals. "It is an achievement of the measures we have been taking, [and] we will continue working for an integral immigration treaty," said Fox. "We're going for more, we're going for more."

Some economists tout remittances as the developing world's most reliable and broadly based source of financing--effectively a new form of foreign aid. Foreign direct investment is larger (chart) but tends to fluctuate with global economic swings. Indeed, remittances now dwarf the amount of official development assistance poor countries receive. Sometimes described as "globalization bottom up," these revenue streams, say migration advocates, help alleviate poverty, spur investment and cushion the impact of worldwide recession when private capital dries up. In some low-income countries, remittances can account for up to 15 percent of annual gross domestic product.

Labor mobility leads to higher global standards of living, say migration advocates. According to a recent study by Richard H. Adams Jr. and John Page of the World Bank, a 10 percent increase in immigration from a developing country will produce nearly a 2 percent decline in the number of people scraping by on less than a dollar a day. "You can't think about social or political development [in developing countries] without taking migration into account," says Rodolfo Garcia Zamora, an immigration expert at Mexico's University of Zacatecas. Despite a two-year recession in the United States, and stricter security measures along the 3,218-kilometer-long border to combat terrorism, the number of Mexicans immigrating to the United States has continued to rise. So have their remittance totals--estimated as high as $14.5 billion last year. "Remittances have probably benefited Mexico more than the North American Free Trade Agreement [NAFTA]," says Roberto Suro, an immigration expert who heads the Washington-based Pew Hispanic Center think tank.

While remittance recipients often use the money for basic needs, such as buying food and consumer goods, experts say the money can have trickle-down benefits. Edward Turner of the University of California, Davis, has quantified the multiplier effect: for every dollar sent home from Los Angeles or Chicago to Mexico City or Oaxaca, he reckons, $3 more is generated in the form of construction material, food or contract work. The 7.5 million Filipinos who work in foreign countries sent home nearly $10 billion--through formal and informal channels--last year, and about one of every five families in the Philippines has seen income boosted by remittances. The late Philippine Labor minister Blas Ople said that "overseas employment has built more homes than all our housing programs put together."

Hoping to channel more of the massive flow of private funds into development projects, the Philippines, India, Mexico and other countries have started catering to their overseas workers. At the behest of California-based migrant groups, the Mexican state of Zacatecas last year passed a law giving its foreign workers the right to run for, and hold, public office while living abroad. The Indian state of Kerala has established a government office exclusively to look after the interests of its migrants.

Experts are also rethinking one argument against easy migration--that it will lead to a "brain drain," emptying countries of their most capable workers. "The strong flow of money to India from migrants and its impact on the economy clearly shows that the effects of a brain drain may not be completely to the detriment of the home country," says T. K. Bhaumik, chief economist for the Confederation of Indian Industry. "If remittances are invested, they contribute to output growth."

The case for more immigration can be less obvious in developed countries. But current demographic trends in many Western European countries may leave their leaders with little choice. A United Nations report issued in March 2000 predicted that EU countries could need as many as 159 million foreigners by 2025 to make up the shortfall in the work force caused by an aging population and declining birth rates. France's Economic and Social Council reported in October that the country needs an extra 10,000 foreign workers every year to sustain its economy, a finding that few French politicians embraced as unemployment hovered at just under 10 percent. The number of work permits that Britain issues to foreign nationals has been climbing steadily, from 60,000 in 1998 to 170,000 in 2002. In a step that seems to have foreshadowed President Bush's proposed immigration reforms, British Home Secretary David Blunkett recently endorsed the concept of "earned regularizations" for any of the estimated 300,000 illegal immigrants who can demonstrate that they contribute to the country's economic prosperity.

But every country has its limits. The French, traditionally less hospitable to migrants, put a halt to all work-related immigration nearly 30 years ago. (Only those foreigners who already have family members living in France are eligible for an immigrant visa.) Yet in spite of such restrictions, about 100,000 foreigners settle in France illegally each year. Instead of considering measures to legalize the status of some of them, Paris has responded with a deportation program that sent nearly 29,000 foreigners packing between January and October of last year.

Some analysts worry that developing countries may be too dependent on the munificence of their expatriate population. Some may postpone the implementation of vitally important economic reforms. Countries like Jordan or the Philippines, which have little other significant sources of foreign exchange, are in the most vulnerable position. Mexico's remittances are now larger than tourism revenues and direct foreign investment as the second largest generator of hard currency, trailing only oil money. "If we have remittances and NAFTA and we still don't have development, we're not going about this right," warns Garcia Zamora. "The big question is how to integrate migration and remittances with government development policies. Otherwise, economies lag, people flee and poverty gets worse."

The pitfalls of the migration economy are prompting some governments to take prudent steps. Both Malaysia and the Philippines have set up ministries dedicated to marketing and exporting human labor to foreign countries. Manila is currently lobbying the Japanese government to open up its health sector to Filipino nurses and caregivers. The pressing need to channel a portion of the remittance flows into productive long-term investment has also given rise to some innovative programs. Two years ago the Philippines unveiled a $100 million bond offering that allows overseas workers to purchase $100 in risk-free government bonds as a way of capturing some of their savings for state-sponsored investment projects. Local- and federal-government matching programs in Mexico have helped funnel remittance money into infrastructure projects like roads, schools and hospitals.

Immigration has been a mixed blessing for a lot of those towns that have lost their native sons and daughters to the quest for a better life. The Zacatecas town of Casa Blanca, in Mexico's high central desert, has seen its population plummet from 4,400 to 1,800 in just four years. Dozens of its houses sit empty, abandoned by young men and even entire families who moved to the United States in search of jobs. The few able-bodied men working at construction sites in Casa Blanca are often building houses for neighbors and relatives who have left for El Norte.

One of them is Roberto Herrera, a father of two daughters who has made the perilous journey to California seven times. Herrera is planning another trip to the state capital, Sacramento, sometime this month, apparently undeterred by the U.S. Border Patrol agents on the U.S.-Mexican frontier. The fainthearted might tremble at such a prospect, but Herrera sees no other options on his horizon. "My wife doesn't like me going," he admits, pausing to admire the thick coat of cement he has just applied to a pink marble mansion owned by a fellow migrant now living in Tulsa, Oklahoma. "But we both know that it's necessary." Millions of foreigners living across the world have drawn exactly the same conclusion.